While listening to the news the other morning I heard something that caught my attention.
But first a little background.
After flying between the Hawaiian Islands for more than 60 years Aloha Airlines filed bankruptcy for the second time in last few years. It flew its last passenger flight Monday. They shut down with over 400,000 outstanding tickets. They did not have a count of how many passengers were stranded, but they acknowledged about 700 were at the airport trying to get home.
1900 of there 3500 employees saw their last day on Monday. The word came down on the weekend and it happened that fast.
Now here is the part that caught my attention. The news reporter listed fierce competition and rising fuel costs as primary reasons for their financial problems. He further suggested that the lending industry crisis as the cause for their closing.
The story behind the story was that when Aloha Airlines got into financial problems a couple of years ago, there were many interested buyers for their company. They successfully went through reorganization and avoided the need to sell. In this round they had to sell to save themselves. The roadblock they faced was the potential buyers now are facing difficulty getting the needed financing to make the purchase. The mortgage industry problems were cited as the reason for Aloha not being able to secure a qualified buyer.
In a related story, the purchase of the Hyatt Regency Hotel in Waikiki is in jeopardy citing the same reason.
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It's the old liquidity. Hey, perhaps the Fed will open a "window" for distressed airlines like they did for financial houses on Wall Street.
Lenn - Possibly they can tap some of our oil reserves and the get the price of fuel back down.
The airline industry is feeling the hurt right now. Oil prices are hitting them hard. And they have to pass it along to the passenger, which will keep vacationers close to home if it continues.
Eric - In this case the competition was so fierce they were unable to pass on the increases.
Hi Randy,
I was so sorry to hear about this the other day, I've flown them man times. Sad to hear about all who lost their jobs.
Lynda - The only positive part of that story is that unemployment is quite low here. The surviving airlines will also be expanding to handle the additional passenger and cargo load.
Randy:
I heard about this early this morning - too bad for them. I heard of several people who have had to find new tickets. The oil prices are cuasing problems for lots of folks.
Jeff
Jeff - It is time to build a few more refineries and tap a few more wells. Hopefully the technology will come faster to remove some of our dependence on oil.
Randy - this was very unfortunate that Aloha closed their doors. I am hopeful the employees will all be able to secure positions with other airlines. This was big on the news here in So Cal - in fact Aloha flew out of Orange County airport. I am also hoping that these fuel prices go down and stabilize . . . it affects everyone across the board.
Sharon - The oil companies had record profits and our government took in record taxes on fuel. I guess it will be tough to convince them of the need to lower fuel prices.
Randy I understand how rising oil prices could have a very big negative impact on an airline, but I fail to see how this is connected to the mortgage industry. As you pointed out this is not the first time in recent years that this airline has found itself in financial trouble, maybe they should not have been bailed out the first time.
Oil prices might have been a big part of them shutting down, but ownership and management needs to own up to some of the blame themselves.
Randy... I agree with George's comment.... But I am sure there is more behind it... I am always leery of the news and the media though. They can point blame so easily and worry about the story later... overall, it's just ashame that so many lost their jobs at a flick of a light switch.
George - I agree. What really hurt them the most was another airline coming into town. They were sued successfully, I guess the hurt was too deep. The point the news announcer made was that they had buyers for the company, but because of the situation with the lenders, financing is just too hard to come up with for that type of transaction.
The Hyatt Regency sale has been delayed for the same reason. They are having difficulty securing the financing.
Jeff - The airline was struggling for the last few years. Both local carriers went into chapter 11 a couple of years ago and came out. This one just couldn't keep it going.
Are there enough other carriers to get back and forth on the islands? It is always amazing when smart people cannot make a business work.
So, it sounds like it isn't necessarily residential ortgages that are a problem, but commercial lending. Or are they suggesting that the entire troubled US economy is the fault of the lending crisis? There are so many other factos at work here...
Robert - There are two others. The Superferry has been dry-docked for many weeks. Hopefully it will be back up and running in the next week or two. Air cargo will also be a problem.
Marlene - They are saying that they are tied together.
I was so sorry to hear that. All the great locals are going down the tubes - who even remembers PSA or Hughes Airworst or the dozens of small regionals that braved the frontier of flying into local airports. We were just ready to make some reservations with Aloha for our wedding in August.
Gene - ATA also closed its doors yesterday. The 2 together account for nearly 20% of the flights into the islands, plus the inter-island flights with Aloha.
I read in the paper yesterday that Aloha got the best "on-time" rating for its flights of any airline. Too bad they are now out of business! Where's the reward for their efficiency?
Eric - they were effecient for on time, but not in their book keeping apparently.
Aloha Randy,
Thanks for your blog.
Peace
Kimo - Thank you for stopping by.
Sure blame it on the real estate industry - or Canada! : )
Cute pictures.
Georgina - The lending industry's problems are making it hard for struggling businesses to sell or refinance.